For the fiscal second quarter ended May 31, KB Home posted earnings of $9.6 million, or 10 cents a share, down from $26.6 million, or 27 cents a share, a year earlier. Revenue grew 10% to $623 million. This beat Wall Street expectations of $619 million in revenue and earnings of 8 cents a share, according to Thomson Reuters.

The overall value of net orders, an indicator of the builder’s future performance, increased 38% from the prior-year period to $1.05 billion, while net orders rose 33% to 3,015 homes.

The company’s backlog as of May 31 was 4,733 homes, a 39% increase from the same period a year earlier. The average selling price rose 6% to $338,500.

Major U.S. stock indices finished a volatile session by extended their losing streak to a fifth straight day amid a shocking move by Swiss central bankers and disappointing earnings reports from two big banks.

The Dow Jones Industrial Average fell more than 100 points, or 0.6% to end the day at 17,321. The S&P 500 closed at 1,993, after falling 18.57 points, or 0.9% and the Nasdaq fell 68 points, or 1.47% to close at 4,571.

So far, the fourth quarter has been a letdown for big banks. Today, Bank of America (BAC) and Citigroup (C) disappointed investors with falling earnings that landed short of Wall Street’s diminished expectations amid legal costs and a drop in trading revenue. BofA fell 5.2% to close at $15.20 and Citigroup dropped 3.7% to end at $47.23

Earlier, markets were rattled after Switzerland’s central bank ditched a three-year-old anchor to the euro, which sent the Swiss franc soaring. Exporters of Swiss goods suffered, with U.S.-listed shares of Swatch Group (SWGAY) rising 5.3%.

Elsewhere, electronics retail giant Best Buy (BBY) fell 14% to close at $34.29 after the company issued dim guidance. And biotech stocks felt pressure from valuations-conscious investors.

Oil prices fell Thursday, after an early increase helped fuel a stock-market advance early today. The price of gold, also seen as a safe-haven asset, rose 2.5% to $1264.70 an ounce.

Volatility continued Thursday with the CBOE Volatility Index, which measures expectations for swings in the S&P 500, climbing 5.7% to 22.73, above the 10-year average.

In corporate news: Lennar (LEN) fell 7.7% after it warned of lower margins in the year ahead, weighing on many homebuilding peers. The iShares U.S Home Construction ETF (ITB) dropped 5% and the SPDR S&P Homebuilders ETF (XHB) declined 4%.

Target (TGT) gained 1.8% to close at $75.67 on news it will exit its money-losing Canadian operations.

Meanwhile, DHI’s efforts to drive higher unit appears to be working. For the 2015 fiscal year, the home builder expects to complete sales on 34,500 to 37,500 homes for $9.5 billion to $10.5 billion, up from this year’s 28,670 houses for $7.8 billion.

D.R. Horton jumped 2.4% to $24.

It’s been a good week for home builders. On Friday, the National Association of Realtor’s chief economist, Lawrence Yun forecast a surge in sales of newly built single-family homes to 624,000. Yesterday Toll Brothers (TOL) posted better-than-expected quarterly earnings. And since Friday’s close, the SPDR S&P Homebuilders ETF (XHB) and the iShares U.S. Construction ETF (ITB) have climbed 1.4% and 2.3% respectively

But it’s been a dim year for homebuilders. Compared to the start of 2014, the ITB is flat and the XHB has fallen roughly 4%, compared to a 10% gain by the S&P 500 Index.

As MarketWatch.com writes:

Well, investors have been fickle, as housing-market data have fluctuated from month to month. The Commerce Department said U.S. home-building permits in September were at a seasonally adjusted rate of 1,018,000, up 1.5% from August. But the revised August number of 1,003,000 was down 5.1% from the revised July rate.

As for housing starts, they rose 6.3% in September from August. And in August, the rate had dropped 12% from July.

That’s a lot of ups and downs. But the really good news was that September housing starts were up 17.8% from a year earlier.

Home owners are having a rough time of it. Earlier this week, weak housing data and a downgrade of D.R. Horton (DHI) on the heels of a weak earnings report sent the industry reeling.

Today, Beazer Homes (BZH) is having a bad day, falling 9% to $15.74 after its fiscal third quarter loss widened to 47 cents a share, missing expectations, while revenue rose less than expected to $354.7 million.

We reiterate our Neutral rating on BZH. We anticipate a below-forecast community count at quarter end produced slower Y/Y order growth in F3Q14 than we expected. Also, we believe the consensus EPS estimate for BZH contained some estimates that included the one-time $19.8 million pretax charge for debt reduction and some that didn’t so we would not dwell on the EPS miss versus consensus when evaluating the results.

The average sales price for homes closed on rose 12.1%> But what really drew attention was the 6.6% drop in new home orders.

McCanless and Worthman wrote:

Y/Y order growth of -6.6% for F3Q14 missed our +7.5% estimate and BZH’s 142 communities at quarter end was below our 150 community forecast. BZH highlighted delays in developing neighborhoods in the F2Q14 conference call, and while we believe the lack of communities is the most likely cause for the order miss…

Among other home builders, D.R. Horton fell 0.7% to $20.72. Lennar (LEN) fell 1.7% to $36.39 and KB Home (KBH) fell 2% to $17.01. PulteGroup (PHM) sank about 2.15% to $17.74.

Industry giant DR Horton (DHI) fell 1.4% to $21.30, declining for a third straight trading session since posting disappointing financial results on July 24, the same day the Census Bureau released a weak new home sales report for June. Today’s catalyst? More weak housing data and the aftershock from MKM Partners downgrade of the stock from Buy to Neutral amid worries about gross margins.

According to the financial results released last week, D.R. Horton used sales incentives to boost volumes during the previous quarter. So while sales contracts rose 25% in the quarter ended June 30, the gains came at a price. Those incentives drained nearly a full percentage point from the home builder’s gross margin.

In Friday’s note to investors, MKM analysts Megan McGrath and Ross Sparenblek scolded the company for its “poorly managed earnings call.” The pair wrote:

…We think DHI management perhaps suffered from a bit of hubris yesterday, assuming they could “change the conversation” from a focus on gross margins to a focus on return on investment. However, in a quarter when gross margins saw a roughly 200 bps decline, we think this clearly backfired. Although order growth was strong (+25%), investors were not comforted by the margin that needed to be sacrificed to get to that growth level…

In all, D.R. Horton’s stock price has fallen 14% since last week’s earnings miss. But it isn’t the only housing stock suffering today. Data from the National Association of Realtors regarding pending home sales for June failed to live up to expectations, reporting a drop in signed contracts to buy existing home after three months of growth.

Home builder stocks have had their ups and downs over the last few months. But on Thursday, the sector collapsed like a faulty roof.

Investors were already skittish in the face of rising mortgage rates. But stocks are plunging across the board in response to disappointing financial reports released today by PulteGroup (PHM) and D.R. Horton(DHI).

Barrons.com has been cautious on the home builder sector for some time. Last month, we suggested avoiding the entire sector ( see Barron’s Take, “Don’t Bet the House on Home Builders,” June 25), arguing that the second half of 2013 could be difficult.

Borrowing costs have surged on expectations that the Federal Reserve will scale back bond purchases. The 30-year average fixed mortgage rate was 4.31% in the week ended today, up from a near-record low of 3.35% in May, according to Freddie Mac.

Homebuyers are rattled, contributing to a rise in cancellations and a drop off in traffic.

Housing stocks have been on a tear. But the shares lost ground across the board Monday after data showed a decline in June home sales.

Earlier today, National Association of Realtors said existing June home sales fell a seasonally adjusted 1.2%. Those sales remain at their second-highest rate in a little more than three years. Nevertheless, exchange-traded funds following home builders declined with the iShares U.S. Home Construction ETF (ITB) falling 1.2% to $22.94 and the SPDR S&P Homebuilders ETF (XHB) following with a 0.4% drop to $30.66.

And leading the slide, Hovnanian Enterprises (HOV) fell 2.2% to $5.64 followed by KB Home (KBH), and D.R. Horton (DHI) which each fell 2% to $18.70 and $21.62 respectively. Beazer Homes USA (BZH) fell 1.7% to $18.15, followed by a 1.6% drop by PulteGroup (PHM) and a 1.1% decline by Toll Brothers (TOL).

Home builders have risen and fallen in recent months, propelled higher by a rebound in the U.S. housing market and pulled lower by rising interest rates.

But recent comments from Fed Chairman Ben Bernanke have dimmed worries that the Federal Reserve has imminent plans to taper its $85 billion bond-buying. So for July, most builders are in positive territory. Since June 30, the iShares housing ETF has risen 3%.

Still, a recent spike in 30-year fixed mortgage rates could be putting pressure on sales.

June new-home-sales data is on tap for Wednesday. And several builders are slated to report quarterly results this week, including Pulte and D.R. Horton on Thursday.

A day after home price statistics helped send the markets higher, home builders are trading lower as questions bubble up about housing market health.

U.S., mortgage applications dropped for a third consecutive week, down 9% in the latest period, according to Mortgage Bankers Association data released Wednesday. Blame a drop in refinancings, and this reality: the interest rate for a 30-year, fixed mortgage, at 3.9%, is the highest it has been in one year.

Beazer Homes (BZH) is the big loser among homebuilder stocks, down more than 5% while other builders were down more than 3%. Shares of Internet real estate portal Trulia (TRLA) fell 2%.

The Standard & Poor’s Case-Shiller index stats revealed Tuesday showed a 10.9% increase in prices — the best gain in nearly seven years. But U.S. home prices remain 28% below peak levels in 2006. Here’s how home builder stocks were trading recently.

Homebuilders are feeling better than they have since 2006 about the market for new single-family homes, the National Association of Home Builders reported today. An index tracking sentiment rose to 40 in September from 37, its fifth straight month of gains. That said, NAHB Chairman Barry Rutenberg raised concerns about tight credit conditions and higher prices for building materials cooling the recovery.

“Given the fragile nature of the housing and economic recovery, these are significant red flags,” he said in a statement.

In a report released before the NAHB survey, Goldman Sachs analyst Joshua Pollard wrote that new federal policies could spur housing demand.

“On September 11, the FHFA announced a plan to improve its representation and warranty approach. This is a fundamental shift in improving mortgage availability. Starting in January 2013, banks participating in programs like HARP will be eligible for rep & warranty relief after 12 months of on-time mortgage payments. This step along with others coming from the conservator of Fannie Mae and Freddie Mac could ease lending standards – currently the biggest impediment to a stronger housing recovery.”

Goldman sees housing activity rising 20% to 30% in each of the next few years.

About Stocks To Watch

Earnings reports, corporate strategies and analyst insights are all part of what moves stocks, and they’re all covered by the Stocks to Watch blog. We also look at macro issues, investor sentiments and hidden trends that are affecting the market. Stocks to Watch gives you the full picture of the U.S. stock markets, all day long.

The blog is written by Ben Levisohn, a former stock trader who has covered financial markets for the Wall Street Journal, Bloomberg and BusinessWeek.